Notes on my investigation on Hyflux recently listed Preference Share.Preference Share (PS)
The recent Hyflux Preference Share is listed in SGX. Therefore is similar to buying equity through your brokerage. The returns is like a bond in the sense we get fixed returns. And is distributed to your bank account if you have setup like your dividends. The key difference is Hyflux need not have to pay those dividends if they are in bad situation for example in financial distress which unlike bond will result in default.
Why Hyflux issues PS ?
Here the reasons I believe.
1. Need to roll over their earlier issued PS else higher rate
2. Need larger amount now to continue growing
3. More expensive to obtain loan from bank
4. Fewer restrictions and need for flexibility
5. Technically no default if they fail to distribute
6. Not considered debts
7. SCA Business Model required …